By Lucy Rana and B. Michael Shriney
Few commercial arrangements create as much latent intellectual property risk as the operating, management, franchise or licensing agreement under which one party runs a business, and builds a brand, on another party’s asset. While the relationship is cordial, ownership of the name and its artwork is rarely tested. When it ends, both sides often discover that what they assumed they owned, they may not. The Delhi High Court’s decision in the long-running dispute over the DAKSHIN restaurant brand is a vivid illustration, and a warning, for any business whose brand lives inside such an arrangement.
The dispute
ITC had, for decades, operated a hotel in Chennai owned by Adyar Gate Hotels under an operating services agreement first signed in 1985. In 1989, a South Indian restaurant was launched at that hotel under the name DAKSHIN. ITC went on to open DAKSHIN restaurants in its hotels elsewhere in India, and obtained trade mark registrations for the name. The agreement for the Chennai hotel ended in 2015; ITC exited; the hotel was rebranded under a competitor’s banner; and the DAKSHIN restaurant continued to run there, without any objection from ITC at the time. The restaurant later c0ntinued as a standalone restaurant in Chennai. ITC sued in Delhi for infringement, passing off and copyright infringement, and sought an interim injunction. The present decision refused that injunction.
Who owns the mark?
The Court’s prima facie findings on ownership are the heart of the case. It found, on the material before it, that the counterparty had conceived the DAKSHIN concept and had run the restaurant from 1989, and that invoices said to show the brand owner’s use in fact carried the counterparty’s own tax and registration particulars. The clause in the operating agreement that vested intellectual property in the brand owner did not rescue its claim: the mark had been conceived after the agreement was signed, had never been communicated to the counterparty as the brand owner’s property, and had never been added to the schedule of owned marks when the agreement was amended. On that view, the Court found that the brand owner had not established, even prima facie, ownership of the mark.
There was a further obstacle. Both sides held registrations for the same mark in the relevant class. Where two parties are registered proprietors of identical or similar marks, the law does not allow one to sue the other for infringement unless and until the other’s registration is removed, and no such removal has been sought. The brand owner had also never opposed the counterparty’s application, and the Court rejected the allegation that it was obtained by misrepresentation. That single feature can be decisive, and it is frequently overlooked when a dispute is being planned.
Acquiescence: the right that is lost by silence
The Court found prima facie merit in a defence of acquiescence. The counterparty had used the mark independently for years, including alongside a competitor of the brand owner, to the brand owner’s knowledge, without objection, and had built a substantial business under it. The explanations offered for the delay were met with evidence that the parties were, by then, in dispute on other fronts, and that the brand owner was litigating against others in the same period. Acquiescence is not mere delay; it is conduct that allows another to build a business in the belief that no objection will come. Where it is established, it can bar relief entirely, and the boundary between a tolerable delay and a fatal acquiescence is one of the most fact-sensitive questions in brand enforcement.
Copyright in the logo: registration is not ownership
The copyright analysis is a part of the decision that most often surprises brand owners. The brand owner relied on a copyright registration for the artistic work in the logo. The Court held that copyright registration is only prima facie evidence of the particulars entered and is rebuttable. Here, the author named in the certificate was an employee of the advertising agency that had been briefed to create the name, which meant that, as a matter of first ownership under Section 17 of the Copyright Act, the copyright would vest in the agency as the employer, not in the brand owner, absent a proper assignment. The brand owner had placed nothing on record to show that it had commissioned the artwork or taken an assignment of it. On that footing, the registration was prima facie insufficient to prove ownership, and the defence of acquiescence was available against the copyright claim as well.
The lesson is general and important. A logo, a label, a piece of packaging artwork, is almost always created by someone, an agency, a freelancer, an employee, and the first owner of the copyright is not automatically the business that commissions it. Without a written assignment, the business may hold a registration and still not hold the copyright. Under Section 19 of the Copyright Act, an assignment must be in writing and signed by the assignor, and it should identify the work and specify the rights assigned, the duration and the territory. Where no assignment was taken at the time, a confirmatory written assignment from the agency or author should be obtained, and the chain of title documented, well before a dispute arises. This is one of the most common, and most avoidable, gaps in a brand’s intellectual property.
Why this matters
The decision is a reminder that a brand is only as secure as the paperwork and the conduct behind it. Ownership of a name and ownership of its artwork are distinct questions, governed by different statutes, and a registration certificate settles neither conclusively. Agreements that are assumed to vest intellectual property in the brand owner may not reach a mark conceived later, or artwork created by a third party, unless they are drafted and maintained with that in mind. Every mark and logo adopted during the term should be added to the agreement’s schedule of owned marks and communicated in writing to the other party, and records of use, such as invoices and promotional material, should carry the brand owner’s own particulars. A competing registration should be opposed, or challenged by a rectification petition, in good time, because a brand owner who does neither may later find that it cannot sue for infringement. And rights that are real can still be lost by delay and silence, particularly where the other side is allowed to build a substantial business under the mark. For any business that licenses its brand, operates under another’s, or relies on third parties to create its artwork, these are not abstract risks; they are the precise points on which this dispute turned.
Frequently Asked Questions
protection-of-brand-logos
Not automatically. The first owner of copyright in a commissioned or employee-created work is often the creator or the creator’s employer, not the business that pays for it, unless there is a proper written assignment. Many brands discover the gap only in a dispute, when the absence of a written assignment becomes decisive.
No, not conclusively. A registration is only prima facie evidence of ownership and can be rebutted by evidence of who actually conceived, created and used the brand. A certificate alone does not settle ownership, which is ultimately decided on that evidence.
It depends on what the agreement says and on how the parties behaved. A limited licence can be undermined by a mark that was never captured in the agreement, by conduct that allowed the other side to build independent goodwill, or by a failure to object. The outcome turns on the specific terms and the parties’ conduct over time.
Yes, it can. A defence of acquiescence can bar relief where a rights holder has allowed another to build a business under the mark without objection. The line between permissible delay and fatal acquiescence is fact-sensitive and turns on what the rights holder knew and did.
Jurisdiction turns on where the cause of action arose and on the special provisions for trade mark and copyright suits, and it cannot be assumed from where the defendant’s website can be seen. Choosing the wrong forum can end a case at the threshold, so jurisdiction is assessed on the facts of each matter.
Yes. Goodwill arises from the reputation and recognition generated through use of a mark in the marketplace. In appropriate cases, courts may examine the surrounding facts, including adoption, use, promotion and consumer association, to determine where goodwill resides, irrespective of registration.
A registration is only prima facie evidence of ownership, and the first owner of copyright in a logo is often the agency or author, not the business that uses it. A written assignment documents who owns the name and its artwork, including marks and works created later or by third parties. It establishes a clear chain of title and avoids the ownership challenges that may arise in relation to the rights concerned.
Yes, Goodwill is the first requirement of passing off, and registration does not establish it. A passing-off claim can be brought against a registered proprietor, but the claimant must show that it has acquired goodwill in the mark or name and that another party’s use amounts to a misrepresentation, leading consumers to associate that party’s goods or services with the claimant, thereby causing damage to that goodwill.
At the time of writing, these are prima facie findings in an interim application, and the suit continues; the matter has also been the subject of further proceedings whose current status should be confirmed. The value of the decision lies not in a final result but in the questions it exposes, questions that every brand owner relying on agreements and third parties ought to answer for itself before a dispute answers them first.
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